HR Matters - Human resource policies, Compliance, Employment Law Tips

Stay on top of employment law compliance and personnel management the easy way -- through HR Matters Blog. Use the tips as a handy resource to answer your daily HR questions or as a training tool for your supervisors and managers.

Tuesday, September 30, 2008

Employee Access to Personnel Records Q&A

Find out when you have to give your employees access to their personnel files. Even if you are not required to provide access by law, you may find it good practice to do so. Q: Do we have to allow our employees (current and former) to look at and copy their employment records?

A: Personnel records are the property of the employer. Therefore, you generally have discretion over whether to give employees access to their personnel files, unless a state law, court, or other government agency requires access. Federal law does not require you to give employees access.

However, many organizations, as a good will gesture, allow current employees to see and even copy their records. This openness usually reduces employee mistrust and concern about the information in their files. If your files contain only objective and job-related information, their contents should not surprise the employee or unnecessarily create the basis for a legal claim.

Approximately 20 states (including California, Illinois, and Michigan) require you to give employees, and sometimes former employees, access to their records. These state laws generally allow a limited number of inspections per year. Typically, some files, like records pertaining to future promotion, third-party references, criminal investigations, and other sensitive information, may be excluded from inspection. In addition, these laws usually allow you to require written requests for access to the files. Some states also give employees the right to copy their records.

In addition to allowing current employees access, a few states give former employees the right to inspect their files. For example, in Illinois, former employees can review and copy their file for up to a year after termination. Still, many employers are concerned that the information may be used to support a legal claim against them and so prefer to deny access to former employees. Most employment law experts, also concerned about the indiscriminate release of information, advise against giving former employees access unless required by law.

Employees or former employees who sue their employer can usually get their personnel records, and even other employees' files, in the normal legal discovery process. For example, if a former employee files a discrimination claim in federal court, the court can order the employer to turn over all files related to the former employee and any similarly situated employees.

So, in establishing your records access policy, you need to address both your internal corporate operating philosophy and local legal requirements. But in doing so, remember that even if you limit access, you may still be compelled to disclose the information in a legal proceeding.

Do you know how vacation and shift differentials affect overtime pay, or if you can pay "comp time-off?"

Do you know how vacation and shift differentials affect overtime pay, or if you can pay "comp time-off?" Find out the answers to these and other tricky overtime questions. --------------------------------------------------------------------------------------------------------

In this article, you'll get the answers to five more overtime questions, including whether you can pay comp time-off instead of overtime, how vacation time and shift differentials affect overtime pay, whether employees can forgo overtime pay, and what state laws regulate overtime.

1. How do shift differentials affect overtime pay?

Extra pay for shift differentials and "dirty work" generally must be considered in calculating the employee's regular rate. (Shift differentials and "dirty work" pay are extra compensation provided for employees who regularly work unpopular shifts or less desirable jobs.) However, when the differential is at least one and one-half the employee's regular rate and is paid under a collective bargaining agreement that establishes certain hours as the regular work day, it may be excluded from the regular rate and also credited against the employer's overtime pay obligation.

2. Is a nonexempt employee entitled to overtime pay if the employee works a full 40-hour week and also takes a day of paid holiday, vacation, or sick leave?

Not unless the employee actually works more than 40 hours in the workweek. According to the FLSA, nonexempt employees must be paid overtime for all hours actually worked over 40 in a single workweek. Thus, in calculating actual working hours for a nonexempt employee, you do not have to count the paid time off in the overtime calculation if the employee did not perform any work during that period. (Note, however, that a limited number of states, such as Rhode Island, require payment of at least time and one-half for employees who work on certain holidays.)

Consider the following example. A nonexempt employee normally works Monday through Friday, eight hours a day. She receives a paid holiday and does not work on Monday. The employee then works Tuesday through Friday, eight hours a day, and is asked to work eight additional hours on Saturday. The employee's pay would be for a total of 48 straight-time hours (40 hours worked and 8 hours paid holiday). Since she actually worked only 40 hours, she would not receive any overtime pay.

As an aside, if you voluntarily pay a premium of time and one-half (the equivalent of overtime) for work on a holiday, weekend, or evening, you should be able to credit this extra compensation towards any overtime actually earned in the same week.

3. Can you give nonexempt employees compensatory (comp) time-off in lieu of paying them overtime?

Private employers may not give comp time-off in lieu of overtime. However, state and local governments can give nonexempt employees comp time-off at the rate of one and one-half hours for each hour of overtime worked, with certain defined limits.

4. Can employees volunteer to work overtime hours at straight-time pay?

No. It may seem like a "win-win" situation – your nonexempt employees would get extra pay for working additional hours, and you would get extra work without having to pay overtime rates. However, the FLSA specifically requires employers to pay nonexempt employees who work more than 40 hours in a single workweek at least one and one-half times their regular rate of pay for each hour worked over 40.

In interpreting the FLSA's requirements, the Supreme Court long ago (in Brooklyn Savings Bank v. O'Neil, 324 U.S. 697 (1945)) determined that employees cannot waive their rights to overtime compensation, and the signing of such an agreement does not have any force or effect. Therefore, you cannot pressure or allow your nonexempt employees to work any hours over 40 in a single workweek without paying them the overtime rate.

5. Do state laws have different overtime requirements?

Many states also regulate the payment of overtime to employees. Most states simply mirror the FLSA's requirements. For example, Illinois requires employers to pay nonexempt employees overtime at a rate of one and one-half times the regular rate for all hours worked in excess of 40 in a single workweek.

A few states, however, have more restrictive overtime requirements and require employers to pay overtime on a daily basis. For example, in addition to weekly overtime, California requires employers to pay daily overtime at the rate of one and one-half the regular rate of pay for all hours worked over eight in a single day and at double the regular rate of pay for all hours over 12 in a single day. California also requires that time and one-half be paid for the first eight hours worked on the seventh consecutive day of work, as well as double time for all hours over eight worked on that day.

And, at least one state limits the number of overtime hours employees may work. In Maine, employers may not require employees to work more than 80 hours of overtime in a two-week period, except for certain "essential services" employees.

Take Overtime Issues Seriously

The issue of the proper payment of overtime is probably one of the most contested areas under the FLSA, and many employers have more legal exposure than they realize. The DOL aggressively pursues wage and hour claims, and it collected over $165 million in back wages in fiscal year (FY) 2004, up 48% from just three years ago. In addition, recent court decisions have resulted in large adverse dollar judgments when nonexempt employees were not paid properly for all their overtime.

Given the successes of the DOL and plaintiffs' attorneys in pursuing wage and hour cases, you cannot afford to be complacent. So, take care and do not let one of the oldest employment laws on the books (circa 1938) sneak up on you.

Overtime Issues under the FLSA

Calculating overtime often is more complicated than just paying nonexempt employees for all hours worked over 40 in a week. You also have to consider any bonuses paid, how many jobs the employee worked, and whether the employee actually worked 40 hours. Find out in this and next week's E-Tips the answers to ten of the most common questions on overtime.

Most employers understand that the federal Fair Labor Standards Act
(FLSA) requires you to pay nonexempt employees overtime for all hours worked over 40 in a single workweek. ("Nonexempt" refers to all employees covered by the minimum wage and overtime requirements of the law, i.e. those that are not exempt from it.) But how do you determine the appropriate overtime pay rate for a nonexempt employee who works more than one job or is paid a salary (as opposed to hourly pay)?

Sorting through the wage and hour rules can be a formidable task even for seasoned HR professionals. To help you understand the FLSA's requirements, this and next week's E-Tips address ten of the most common questions regarding how to calculate overtime payments for nonexempt employees.

In this article issue, you'll find out how "regular rate of pay" is defined, whether you can average hours, how to pay salaried nonexempt employees, how to calculate overtime for two jobs, and how bonuses affect overtime pay calculation.

Next week, you'll learn whether you can pay comp time-off instead of overtime, how vacation time and shift differentials affect overtime pay, whether employees can forgo overtime pay, and what state laws regulate overtime.

1. How is overtime calculated in general and what is an employee's "regular rate" of pay?

The FLSA requires that every employee covered by the Act who works more than 40 hours in a single workweek must be paid at least one and one-half times that employee's "regular rate" for each hour over 40. The FLSA defines the "regular rate" as all remuneration for employment paid to or on behalf of the employee, although some items of compensation (such as certain bonus payments) do not have to be included in the calculation (see question 5, below). Thus, the employee's regular rate of pay per hour for the week must be calculated before the overtime rate can be determined.

2. When calculating overtime, can you consider the average number of
hours an employee works over several weeks?

Generally, no. The FLSA requires employers to pay overtime for all hours worked over 40 in a single workweek period, and the hours may not be averaged over two or more weeks. A workweek is defined as a fixed period of 168 hours or seven consecutive 24-hour days. So, if an employee works 30 hours one week and 50 hours the next, he must receive overtime compensation for the hours over 40 that he worked in the second week (even though the average number of hours for the two weeks is 40). This rule applies regardless of whether the employee is paid on a daily, weekly, biweekly, monthly, or other basis.

There are two exceptions to this rule. Hospitals and residential care facilities are permitted to establish a 14-day period in lieu of the seven- day workweek for purposes of computing overtime, if the affected employees agree. In addition, public agencies may elect to pay fire protection and law enforcement employees overtime after they have worked a set number of hours (212 hours for fire protection employees and 171 hours for law enforcement employees) per work period (defined as 28 consecutive days) instead of after 40 hours in a single workweek.

3. How do you calculate pay and overtime for a salaried, nonexempt employee?

For employees who are not paid a regular hourly rate (such as those whose compensation is determined on a salary, piece-rate, or commission basis), you must determine what their regular hourly rate would be based on their total compensation. The regular hourly rate is computed by dividing the salary by the number of hours the salary is intended to compensate.

For example, if an employee is hired at a salary of $400 and this salary is compensation for a regular workweek of 40 hours, the employee's regular rate of pay is $400 a week divided by 40 hours, or $10 an hour. If the employee works overtime, he is entitled to receive $10 for each of the first 40 hours and $15 (one and one-half times $10) for each hour thereafter.

4. How do you calculate overtime for a nonexempt employee who works two jobs with different pay rates?

The FLSA regulations specify two methods for determining an employee's overtime rate when he works two jobs at different pay rates. Typically, when working more than one job, the employee's regular rate of pay is calculated as the weighted average of the different rates.

For example, the regular rate of pay for an employee who works 35
hours per week at $15 per hour as a machine operator ($525), and
works 10 hours that same week at $7 per hour cutting the grass outside
the plant ($70), is $595 divided by 45 hours, or $13.22 per hour. Since you have already calculated the regular straight-time rate for 45 hours ($595), you then only owe the additional "half time" premium rate of $6.61 for each overtime hour worked, calculated as half of the weighted average of the two jobs ($13.22 divided by 2 equals $6.61). The overtime premium for the 5 hours worked over 40 in the week, therefore, would equal $33.05 (5 overtime hours x $6.61). Total pay for the week would be $628.05 ($595 straight time pay plus $33.05 overtime premium). The employee's regular and overtime rates may vary from week to week with the number of hours spent performing each job.

Alternatively, an employer and employee may agree, before the work is performed, that the overtime rate will be based on the regular rate that applies to the type of work performed during the hours in excess of 40. Therefore, if an employee spends 35 hours in a week working as a machine operator at $15 per hour, and five hours a week cutting the grass at $7 per hour, the overtime rate for any hours over 40 spent cutting the grass is $10.50 per hour ($7.00 times one and one-half). Conversely, the overtime rate for any hours over 40 spent working as a machine operator is $22.50 ($15.00 times one and one-half). This method of computation is available for hourly employees only and does not apply to nonexempt salaried employees.

5. How do bonuses and incentives affect overtime pay?

Bonuses and incentives that are dependent on hours worked, productivity, or efficiency must be included in determining an employee's "regular rate" of pay. For example, an hourly employee who earns $7 per hour in a 40-hour workweek has a "regular rate" of pay of $7 per hour and an overtime rate of $10.50 (one and one-half times $7). If that same employee received a $50 production bonus for that week, the employee's regular rate of pay would change to $8.25 per hour ($50 plus the regular weekly rate of $280, divided by 40 hours) and the overtime rate becomes $12.38 per hour for that week.

Under some bonus plans, the bonus is not paid weekly. In that case, the employer may disregard the bonus until the time when the bonus is actually determined and, in the meantime, may pay compensation for overtime at one and one-half times the employee's base hourly rate, exclusive of the bonus. When the amount of the bonus is properly calculated, it must be allocated over the period it covers, and a revised overtime rate then must be applied to any hours in excess of 40 that were worked during that period. The employee should receive additional compensation for each workweek including overtime during the period. The amount will be calculated based on the new overtime premium using the bonus, less the overtime premium previously paid. Other examples of bonuses or incentives that must be included in an employee's regular rate of pay are nondiscretionary bonuses paid according to a contract; efficiency bonuses for completing work in less than the allotted time; attendance bonuses; and bonuses paid to employees to work in undesirable locations.

Bonuses that do not have to be included in the regular rate of pay are those received on special occasions (such as Christmas) as a reward for service and which are not measured by, or dependent on, hours worked, productivity, or efficiency. In addition, premium pay for working on holidays, Saturdays, or Sundays does not have to be included in overtime calculations, if the amount is at least one and one-half times the employee's regular rate of pay.

Monday, December 10, 2007

Are PTO Plans Right for Your Organization?

Consolidated paid time off (PTO) plans, or PTO banks, give employees flexibility in using their paid leave and are generally easy to implement. Use the guidelines below to determine if a PTO plan is right for your organization. What happens under your vacation or sick leave policy if an employee needs to stay home with a sick child? Or, what do you do if an employee wants to take two days off to attend a nonwork-related seminar?

Under a traditional policy that separates vacation and sick days, employees often feel as if they are forced to fake an illness to avoid using their vacation allowance. With a paid time off (PTO) bank, you can give employees a set number of paid days a year and then let them choose how the days will be used.

Friday, December 07, 2007

Pregnancy Leave When Not Covered by FMLA (Q&A)

Do you know what your obligations are to a pregnant employee who is not covered by the FMLA? Find out what steps you should take to prevent pregnancy discrimination.Q: If an employee needs leave for pregnancy-related issues, do we have to reinstate her after the leave? Do we have to provide a certain number of weeks of leave? We have 45 employees and are not covered by the FMLA.

A: If your organization is not covered by the Family and Medical Leave Act (FMLA) or if an employee is not eligible for FMLA leave, then you still must comply with the Pregnancy Discrimination Act (PDA), any internal policies, and any state laws requiring pregnancy leaves of absence.

(The FMLA generally applies to employers with 50 or more employees and all public agencies and schools, and provides leave and reinstatement rights for various family and medical reasons, including pregnancy. (Click to download a free FMLA Checklist.) An eligible employee is one who: (1) has worked for the employer for at least 12 months (not necessarily consecutively); (2) has worked for the employer for at least 1,250 hours in the previous 12 months; and (3) works at or is assigned to a worksite that has 50 or more employees or which is within 75 miles of employer worksites that taken together have a total of 50 or more employees.)

The PDA, found at 42 U.S.C. §2000e(k), amended Title VII of the Civil Rights Act to prohibit discrimination based on pregnancy. It applies to employers with 15 or more employees and requires employers to treat women affected by pregnancy, childbirth, or related medical conditions the same as employees who are on leave for other temporary medical disabilities. Thus, because the PDA is an antidiscrimination law rather than a law mandating leave, it does not require covered employers to grant pregnancy leaves. Instead, it only entitles pregnant employees to the same leave and benefits granted to nonpregnant employees with other temporary medical disabilities.

So, if your organization regularly grants leaves for other temporary medical disabilities and guarantees reinstatement, then you should treat pregnant employees in the same manner. As explained in the Equal Employment Opportunity Commission (EEOC) guidelines interpreting the PDA, found in 29 C.F.R. §1604.10(b), any policies relating to the commencement and duration of leave, the availability of leave extensions, the accrual during leave of seniority and other accrued benefits and privileges, insurance coverage, and reinstatement after leave must apply equally to pregnancy and other disabilities.

Although you may not treat pregnant employees differently if the differences affect them adversely compared to others with temporary medical conditions, you may be able to treat them more favorably. In the Supreme Court's ruling in California Fed. Sav. & Loan Ass'n v. Guerra, 479 U.S. 272 (1987), the Court upheld a California statute requiring employers to provide female employees an unpaid leave for pregnancy disability and to reinstate those employees when they are able to return to work unless the job is no longer available. The Court held that a state could mandate the provision of a benefit to pregnant employees that is not granted to other disabled employees. This decision appears to allow employers to give pregnant employees greater leave flexibility than is given to other temporarily disabled employees.

You also should check state law for any additional pregnancy leave obligations. Some states have laws guaranteeing pregnant employees leaves and reinstatement rights. For example, the California statute, discussed above and validated by the Supreme Court, requires employers with five or more employees to provide female employees with up to four months of leave in connection with a period of disability resulting from pregnancy, childbirth, or related medical conditions.

Wednesday, December 05, 2007

Health Coverage Obligations under the FMLA

Untangling the Family and Medical Leave Act (FMLA) health care coverage requirements can be a daunting task. What coverage must be maintained when an employee takes leave and what coverage is the employee entitled to upon reinstatement? Who pays the premium is another tricky area.

Although the FMLA allows you to terminate insurance coverage for nonpayment of premiums or permits your employee to drop the insurance while on unpaid leave, either scenario could cause problems when the employee returns to work and must be restored to full coverage. A review of FMLA guidelines will help you make the right decisions about maintaining health care benefits and paying premiums when an employee requests FMLA leave. (Click to download a free FMLA Checklist.)FMLA Health Care Coverage Guidelines

The FMLA, which requires covered employers to provide up to 12 workweeks of leave to eligible employees for various family and medical reasons, has specific requirements about continuation of health care coverage when leave is taken and about how you should handle payment of premiums. In addition, upon return to work, the employee must be fully restored to health care coverage subject to any changes that may have occurred. Each of these topics is addressed, below.

-- Continuation of coverage. If you provide health care benefits under a group health plan, you must provide the same health benefits during an eligible employee's FMLA leave as would have been provided if the employee worked throughout the leave. (If you do not provide insurance before the leave is taken, the FMLA does not require you to provide it during the leave.) In addition, your obligation to continue health benefits ends when the employee notifies you that he will not return to work from the leave. However, the notification must be unequivocal in order to discontinue health benefits. If the employee indicates he may not be able to return to work, but wants to, you must continue to provide health benefits for the duration of the FMLA leave.

Note, too, that employees on unpaid leave may elect to discontinue health insurance coverage (unless the employer pays the employee's share of premiums) during the unpaid period of FMLA leave. However, these employees still must be reinstated to the same insurance benefits when they return to work.

-- Payment of premiums. The FMLA requires you to pay the premium on health care coverage on the same terms as you paid the premium before the employee took leave, paid or unpaid. Therefore, if you paid 80% of the premium before the employee took leave, and the employee paid 20%, you must continue to pay at least 80% of the premium after the employee takes leave. You also may be more generous, for example by paying the employee's share.

-- Reinstatement of coverage upon return to work. Upon return, the employee must be restored to the same health benefits coverage as provided prior to leave, subject to any changes in benefit levels that may have occurred during the leave. A returning employee may not be required to meet any qualification requirements normally imposed for entry or reentry into the group health plan, including any preexisting condition waiting period or medical examination requirements.

Make sure your company has the HR Policies needed to justify your HR decisions. Furthermore, nothing can replace old fashioned employee training and compliance documentation.

Tuesday, December 04, 2007

Exempt Employees Performing Nonexempt Work Q&A

Q: We have an exempt employee (i.e., exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA)) who would like to work in our call center on the weekends doing nonexempt work. Can we pay her on an hourly basis for the nonexempt work, in addition to her regular salary, without affecting her exempt status?

A: As a general rule, an employee is considered to be exempt if she is paid on a salary basis and her job duties meet the criteria for the administrative, executive, or professional exemptions. Thus, your questions raise two related issues: (1) whether the exempt employee would be performing more nonexempt work than is consistent with her exempt status; and (2) whether she can still be considered paid on a "salary basis" under the FLSA if you pay her additional hourly compensation.

Regarding the first issue, the FLSA salary basis test for white-collar exemptions requires that most exempt employees be paid a salary of at least $455 per week and that their "primary duty" must consist of the performance of exempt work. (Download free report: "FLSA Exemption Regulations: Understanding The Issues.") The FLSA regulations, found in 29 C.F.R. §541.700(b), indicate that employees who normally spend more than 50% of their time performing exempt work will satisfy the primary duty requirement. However, time alone is not the sole test, and employees who spend less than 50% of their time on exempt duties still may meet the primary duty standard if the other factors support the exemption.

Although these regulations focus on nonexempt work related to the exempt employee's regular job, the same analysis can be applied when the employee works in a second, unrelated job. Thus, as long as the exempt employee devotes over 50% of all of her working time to exempt job duties, including the time spent in the call center doing nonexempt work, she should continue to meet that exemption criterion.

The second issue raises the question of whether extra compensation paid in addition to the exempt employee's salary will jeopardize the exempt status. The FLSA regulations define "salary basis" as payment on a weekly or less frequent basis of a predetermined amount constituting all or part of compensation, without reductions for variations in the quality or quantity of the work performed.

The regulations specifically allow employers to provide exempt employees extra compensation without jeopardizing the exemption or violating the salary basis requirement. According to the regulations, found in 29 C.F.R. §541.604(a), if the exempt employee is guaranteed a minimum weekly payment of at least $455, she also may be paid a commission on sales or a percentage of profits or sales, or even additional compensation based on hours worked beyond the normal workweek. This additional compensation can be paid on any basis, including a flat sum, bonus payment, straight-time hourly amount, time and one-half, or any other basis, including paid time-off.

Note that this reference to extra payments calculated on an hourly basis was added to the regulations in August 2004. (Download free report: "FLSA Exemption Regulations: Understanding The Issues.") The old regulations also allowed for extra compensation in the form of commissions and bonuses, but did not address whether employers could pay exempt employees extra amounts based on hours worked. Some courts, and the Department of Labor (DOL) in nonbinding opinion letters, have traditionally allowed employers to pay additional compensation calculated on hours worked without affecting the exempt status. The DOL formalized this position in the 2004 revisions.

As an employer, you need to know what your obligations are to employees that take military leave under the Uniformed Services Employment and Reemployment Rights Act (USERRA). Our editors have analyzed the USERRA statute and court cases to answer 15 common questions concerning USERRA requirements.

USERRA, codified at 38 U.S.C. §4301 et seq., provides enhanced leave rights and job protections for employees absent for military duty. It prohibits discrimination in employment and retaliation against any person who was, is, or applies to be a member of a “uniformed service,” or who performs or has an obligation to perform “service in a uniformed service.” (For discussion on Reinstatement, see below.)

USERRA further provides that you must grant a leave of absence for up to five years to any person who is absent from a job because of service in the uniformed services. (See question 5, below.) In addition, you ordinarily must reinstate the returning veteran to the position he would have held if his employment had not been interrupted by military service.

The USERRA applies to all employers, regardless of size, and to every employee, regardless of length of service or part-time status (with the exception of workers employed for brief, nonrecurrent periods).

This service includes voluntary and involuntary active duty, active duty for training, initial active duty for training, inactive duty training, and full-time National Guard duty. It also includes any absence needed for an examination to determine whether a person is fit to perform military duty. The “uniformed services” are the Army, Navy, Air Force, Marine Corps, Coast Guard, and their reserves; the Army and Air National Guards, including periods of training; the Public Health Service commissioned corps; and other categories designated by the President in times of emergency.

Yes. Employees must provide employers advance written or oral notice of their need for military leave. USERRA does not specify how much notice must be given. Notice is not required if military necessity prevents the giving of the notice or it would be unreasonable or impossible to give the notice.

Reemployment rights apply only to veterans whose cumulative period of uniformed service does not exceed five years while employed by the same employer. However, in computing the cumulative five-year period, you may not count time spent in National Guard and reservist training.

Further, you may not count involuntary extensions of service that result from the following:

-- an order to remain on active duty because of a war or national emergency (unless the extension is for training);

-- the veteran’s inability to obtain release orders before expiration of the five-year period through no fault of his own;

-- an obligation to complete an initial period of service that is beyond five years;

-- an order to fulfill additional training requirements certified in writing by the Secretary of Defense;

-- a call into federal service as a member of the National Guard;

-- or an order to active duty, as determined by the Secretary of Defense, in support of certain operational or critical missions.

No. USERRA only requires unpaid time off. The military generally pays its activated members. Employers often provide pay for at least a limited period of time, in recognition of the duty the employees are fulfilling and because military pay is often much less than the employee’s normal wages. Many employers also allow employees to use any accrued vacation during military leave, although you may not require employees to use vacation. Note, however, that the Fair Labor Standards Act requires that exempt employees who take military leave and work for the employer in the same week must be paid for the entire week in order to maintain the exempt status.

USERRA requires employers to allow any employee on a military leave to elect and pay for continuation of coverage for himself and dependents under any health care plan provided in connection with employment. This coverage ends after 18 months or, if earlier, on the date the veteran fails to return or apply for return to employment as required. (See Return to work requirements.) The person electing this coverage may be required to pay up to 102% of the full premium associated with coverage for other employees. If the period of service is less than 31 days, the employer must continue health insurance as if the person is actively employed, and the person may be required to pay only the regular employee share of the premium.

If the coverage is terminated while the employee is on a military leave (either because the employee elects not to continue the coverage, because the period of service exceeds 18 months, or for any other reason), the employee and his dependents may not be subject to waiting periods or preexisting condition exclusions upon reinstatement.

USERRA requires employers to treat the period of military leave as service with the employer for purposes of vesting and the accrual of benefits. Further, the period of military leave may not be treated as a break in service under the pension plan. On reemployment of the veteran, the employer must make any employer contributions to the pension plan that would have been required on behalf of the returning employee had he continued working for the employer during the period of service. Similarly, the returning veteran must be allowed to make up any employee contributions or elective deferrals he would have been eligible to make during his period of service.

Employees returning from military leave are entitled to any benefits determined by seniority that they had when their leave began and also those benefits which would have accrued had they remained continuously employed. Thus, if an employer’s vacation policy is based on seniority, the employer must count the years of military leave as if they were years of actual work to determine how many weeks of vacation the returning veteran would then receive.

However, the employee does not have to be allowed to accrue vacation while on leave, unless other employees on leave are allowed to do so. In addition, employers must treat employees on military leave the same as other employees on a leave of absence with respect to benefits not determined by seniority.

Yes. On completion of the period of military service, the returning veteran must notify the pre-service employer that he intends to return to employment. The length of time that the veteran has to contact the employer depends on the amount of time spent in service, as follows:

-- Service of 30 days or less. The returning veteran must report to the employer on the first full regularly scheduled work period on the first full calendar day following completion of the service, plus eight hours. If it is impossible or unreasonable for the veteran to report within that period through no fault of his own, he must report as soon as possible. This reporting period also applies to an employee who is absent from work for an examination to determine his fitness for military service.

-- Service of 31 to 180 days. The veteran must apply for reemployment no later than 14 days after military service ends, or, if it is impossible or unreasonable for the veteran to report within that period through no fault of his own, on the next calendar day on which it is possible.

-- Service of more than 180 days. The returning veteran must apply for reemployment within 90 days of the end of the military service.

-- Service-incurred or aggravated injury. If the returning veteran is hospitalized for, or convalescing from, an illness or injury that was incurred in or aggravated by the period of service, the above reporting deadlines may be extended for up to two years for any period of recovery.

USERRA requires that any veteran who receives a certificate showing satisfactory completion of military service must be restored to his previous employment. The type of position to which the veteran must be reinstated depends on the period of service and on the veteran’s abilities at the time of reinstatement. The following time frames apply:

-- Service of 90 days or less. The veteran must be reemployed in the position he would have held if he had continued in employment without interruption for military service, as long as he is qualified for that position. If the veteran would have been promoted if he had continued in employment but cannot be qualified for that new position after reasonable efforts by the employer, he may be employed in the position he held when military service began.

-- Service of 91 days or more. The veteran must be reemployed in the position he would have held except for the interruption for military service, or in a position of like seniority, status, and pay, if qualified for that position. If the veteran would have been promoted if he had continued in employment but cannot be qualified for either that new position or an equivalent one despite the employer’s reasonable efforts, he must be reemployed in the position he held when the period of service began or in a position of like seniority, status, and pay.

-- Veterans who cannot be qualified for the job. If the veteran cannot be qualified for the job he would have held or the position he formerly held after the employer’s reasonable efforts, and his inability to qualify is not related to a service-incurred or aggravated disability, he must be reemployed in any position of lower status and pay for which he is qualified, but with full seniority.

A disabled veteran whose disability was incurred or aggravated by military service and who cannot perform the job he would have held even after reasonable accommodation by the employer must be reemployed in: (1) any other position of equivalent seniority, status, and pay for which he is qualified or could become qualified through the employer’s reasonable efforts; or (2) in the nearest approximation to an equivalent position consistent with the veteran’s circumstances.

Note that USERRA requires that returning veterans be “promptly reemployed.” What is considered “prompt” generally depends on the circumstances of the case and how long the employee has been on military leave.

In many cases, the position the veteran would have held had employment not been interrupted by the period of military service will be the same as the position held when the period of service began. When there would have been a change, however, the “escalator principle” requires that the veteran receive any change in position or benefits to which he would have been entitled had he remained continuously employed.

For example, the returning employee must be granted seniority for the leave period. Similarly, the veteran must receive all other “perquisites of seniority,” such as seniority-tied increases in vacation and sick-day accrual rates, pay raises based on longevity, and promotions based on longevity or length of service the veteran was reasonably certain to have achieved.

Also, if a veteran is laid off while on military leave, and would have received severance pay had he been actively employed at the time of the layoff, he is entitled to that severance pay on his return. Moreover, if the veteran was laid off and on a recall list at the time he entered military service, he must be returned to the recall list on completion of his service.

USERRA specifies certain limited circumstances under which an employer is relieved of its obligation to reemploy veterans returning from military service. The burden is on the employer to prove that one of these exceptions applies. These circumstances include:

-- Change in employer’s circumstances. If reemployment is “unreasonable or impossible” because the employer’s circumstances have changed, the employer may deny reinstatement. For example, if the employee’s job has been eliminated in a reduction-in-force, reinstatement is not required. However, an employer does not satisfy this standard simply because the position has been filled or no opening exists.

-- Disabled veteran’s employment is an undue hardship. Reinstatement may be denied if the employment of a veteran with a service-incurred or aggravated disability would cause an undue hardship to the employer after reasonable efforts to accommodate the disability.

-- Dishonorable discharge. If an employee is separated from uniformed service with a dishonorable or bad conduct discharge, his rights to reemployment and other protections end.

USERRA also protects returning veterans from discharge without cause for a period of time after reemployment. If the returning veteran’s military service lasted between 31 and 180 days, the veteran may not be terminated without cause for 180 days after the date of reemployment. If the veteran’s period of military service was more than 180 days, this protection applies for one year after reemployment. Veterans with less than 31 days of military service do not have protection against discharge without cause, but like other returning veterans, they are protected from discrimination based on military service or a continuing service obligation.

A number of states have laws protecting employees who are members of the uniformed services or who take time off for military leave. Generally, the state laws are not as comprehensive as the federal USERRA. For example, California prohibits discrimination in employment against members of the armed forces but does not provide reemployment rights following military service. New York provides job and benefits protection only for public employees who take a leave of absence for military duty. Employers are required to comply with both USERRA and any applicable state law.

USERRA Protects Those Who Serve

USERRA creates a number of HR administrative headaches. But, before you complain too loudly, remember that Congress historically has been very clear that military service deserves a favored status. USERRA is intended to encourage and protect those who are called up, or volunteer, to serve our country. So, in times of emergency or national threat like the present, the greater national need is rightly given special protected status and deserves our support.

Paying Nonexempt Employees for Travel Time to Seminars or Training

Q: When do employers have to pay nonexempt employees for time spent traveling to a seminar or a training session? Does it make a difference if the employee spends the night?

A: Nonexempt employees (those employees covered by the minimum wage and overtime requirements of the Fair Labor Standards Act ("FLSA")) must be paid for all time considered working time. Whether travel time is counted as working time depends on when the travel takes place and what kind of travel is involved.

According to the FLSA regulations, the time spent by a nonexempt employee commuting from home to work is not considered working time and does not have to be paid. However, if a nonexempt employee travels to a seminar or training session that lasts for the day, the employee must be paid for all time spent traveling to the seminar, as well as all time spent at the seminar. The employee is considered to be on a special assignment performed for the employer’s benefit. For example, if a nonexempt employee travels two hours to a seminar, attends the seminar for eight hours, and then drives home for two hours, the employer would have to pay for the eight hours at the seminar and the four hours of travel time. The employer may deduct from the total working time the employee’s normal commute time and any meal period not spent performing work or in the seminar.

If a nonexempt employee travels to a seminar and leaves the day before the seminar begins, the employer only has to pay for travel time that cuts across the employee’s regular workday. In this case, the employee is simply substituting travel for other work duties. Thus, if the employee normally works from 9 a.m. to 5 p.m., and he leaves for the seminar at 4 p.m., he is only entitled to be paid for one hour of travel time, even if he travels until 9 p.m. Travel time on nonworking days is also considered work time if conducted during normal work hours. For example, if the same employee travels on a Saturday, he must be paid for any travel time between 9 a.m. to 5 p.m. The employer may deduct normal meal periods from the travel time. In addition, travel during nonwork hours may be considered work time if the employee is actually performing work while traveling.

Monday, April 23, 2007

When Do You Need Written HR Policies?

(Part 1 of 2)

Recent developments in harassment and other discrimination case law show just how risky it can be if you do not have written policies. Find out how to make sure your policies protect, not harm, your organization.

When was the last time you reviewed your organization's policies? If you're like many employers, writing or updating policies is at the bottom of a lengthy "to-do" list. And, you may even question the value of having written policies because of the apparently conflicting advice concerning their usefulness.

On one hand, many HR experts advocate having written policies as a way of communicating your organization's values and practices to employees. Alternatively, a growing number of attorneys are warning their clients that poorly drafted policies may land them in court. So, whom should you believe?

The short answer is both groups. Upon closer consideration, these positions are not contradictory. Well-written policies can both serve as an effective communication device and help you stay out of court, or at least give you a better chance of prevailing. In contrast, poorly executed policies can create unintended contracts and be used of evidence of noncompliance in court.

This week's and next week's E-Tips will help define the underlying issues and make clear why written policies that are carefully developed, updated, and applied are an effective tool that you need. This week, you will find out why written policies are important, who needs to have them, and how to make sure they do not create a contract that you must follow.

Next week, you will learn the difference between supervisory manuals and employee handbooks and find out which policies every employer should have.

1. Why are written policies important?

Sound employment policies provide the framework within which an organization governs its employee relations. A policies and procedures manual guides both managers and employees as to what is expected and can prevent misunderstandings about employer policy. In addition, supervisors and managers are more likely to consistently apply policies that are clearly communicated in writing.

It is true that written policies, like any record, can be used against an organization in a lawsuit. Poorly drafted policies often become the main evidence presented when employees allege that the policies were in fact a contract that the employer violated. However, policies that are carefully written so as not to be contracts actually should protect against these claims and not be a problem. (See number 4, below.) In addition, carefully written policies can be used to illustrate your commitment to a positive work environment and nondiscriminatory employment practices. (See number 3, below.)

2. Are we required to have written policies?

Although written policies in general are not legally required, certain policies may be mandatory or at least be considered an important component in helping employers establish good faith compliance with federal and state law.

For example, the Supreme Court has indicated that employers may protect themselves against liability for sexual harassment by having clearly articulated policies against sexual harassment that include effective complaint procedures. In addition, the Family and Medical Leave Act requires covered employers to provide written information regarding employee rights and employer obligations under the Act. Similarly, certain federal contractors must have written equal employment opportunity policies. And finally, many state laws require written harassment policies and policies informing employees about compensation issues.

3. Does every organization need written policies?

As a general rule, every employer, except maybe those with fewer than 15 employees, should have written policies. Employers with 15 or more employees are covered by federal discrimination laws (such as Title VII of the Civil Rights Act and the Americans with Disabilities Act) and most state discrimination laws. Written policies are a good starting point to show your commitment to nondiscriminatory employment practices. For example, a performance review policy can show the job-related criteria used to evaluate employees and any safeguards used to ensure the process is conducted in a fair and objective manner.

Smaller employers should at least consider creating a handbook since it is likely they already have some policies in writing. For example, employment offer letters may explain vacation and sick leave accrual while other items, like a posted memo, may outline pay procedures. Thus, to ensure distribution to all employees, even the small employer is well advised to compile these memos into a handbook that is given to every employee.

4. Will we create a contract if we have written policies?

The simple act of putting your policies in writing should not create a binding contract if the policies are written as guidelines that explain generally what your requirements are and how employees normally will be treated. However, you can create a contract by using language that conveys rigid rules that must be followed exactly as written in all circumstances.

Therefore, you should build flexibility into your wording and steer clear of any promises that could be interpreted as a contract. Your policies should not, for example:

State that the organization will "only" or "always" do something or"must" act in a particular way;

Describe employees as "permanent";

State that employees will be terminated only for "cause";

Make promises of job security; or

Use all-inclusive lists, such as in disciplinary procedures or work rules.

Instead, you should use terms such as "generally," "typically," "usually," and "may" so that managers have flexibility in interpreting and applying the policies. In addition, you should specifically retain management's right to update, change unilaterally, and implement all policies as the organization sees fit. Finally, you should include a strong "at-will" statement that clearly specifies that all employees (who do not have contracts or collective bargaining agreements specifying otherwise) may quit at any time and for any reason or may be terminated at any time and for any lawful reason.